Guilty or Gullible?

Within the National Stock Exchange (NSE), former managing director (MD) and CEO Chitra Ramkrishna’s reliance on a mysteri­ous ‘yogi’ in running the prestigious bourse, with a market capitalisation of ₹ 2,00,00,000 crore, was a poorly kept secret. As income tax authorities and the Central Bureau of Investigation (CBI) pursue fresh leads on scandalous events that go back to 2013, the spotlight has fallen on how a nonentity of a middle-level manager suddenly became a key strategist and a so-called guru’s emailed instructions decided promotions, postings and even pay hikes at the exchange.

The NSE saga hit the headlines after a Securities and Ex­change Board of India (SEBI) order severely indicted the top brass at NSE for failing to stop a series of bizarre actions that not only amounted to poor oversight and serious misgover­nance but also pointed to the leak of sensitive market-related information over a period of several years till Ramkrishna and Anand Subramanian, the official she elevated to group operat­ing officer (GOO) and advisor, quit the exchange in late 2016.

People familiar with NSE’s functioning say that talk of Ramkrishna relying on a guru to guide her affairs was discussed even before she was elevated as MD and CEO. At the time, she was seen as a success story, one of the original team that joined NSE at its inception in the early 1990s as part of a project to set up a modern, automated market platform in tune with new fi­nancial instruments and screen-based trading technologies. Her appointment also drew attention as the rare woman executive to breach a glass ceiling at one of the world’s biggest and busiest exchanges. The turn of events saw the exchange being exposed to ridicule and calls for an overhaul of NSE have only grown louder as details of the extraordinary saga emerge.

A central aspect of what happened at NSE revolves around a “siddha purusha (elevated soul)” who, according to Ramkrishna, did not have a physical presence and could materialise at will. This entity communicated through an email id (rigyajursama@outlook.com) and the SEBI order has several extracts of mails ex­changed with Ramkrishna where she asks the ‘swami’ for in­structions which are provided at some length. In her response to the notice served by SEBI, the former CEO said she had met the person referred to some 20 years ago on the banks of the Ganga (exact location unspecified) and received guidance on personal and professional matters not unlike the manner in which modern-day business leaders consult executive coaches. She said she would not know if the person shared information discussed with her with any other entity or person and denied that the guru could be anyone connected with NSE.

The third cog in the wheel is Subramanian, who was an ordi­nary middle manager at Balmer Lawrie till he landed a coveted job at NSE that took his salary from about ₹ 15 lakh a year to ₹ 1.68 crore as a consultant required to work four days a week. This soon became ₹ 4.21 crore with Subramanian, as noted by the SEBI order, achieving such salience that just about everyone reported to him. “As per the organizational chart depicting the reportees of Noticee no. 6 (Subramanian), as submitted by NSE vide email dated April 10, 2018, various functional heads viz. Chief People Officer, Chief Marketing Officer & CSR, Strategic Business Head-C&D, CBO-Current & Derivatives, CTO-Projects, CTO-Operations, CEOs-subsidiaries, Business Head-Int. & FII In­terface, etc. were reporting to Noticee no. 6,” the SEBI report says. This was quite a coup for someone with no ex­perience in capital markets and with a thin CV that did not include any hint that he might be qualified to be the main strategic mind at an exchange as big and sophisticated as NSE.

But Subramanian had powerful forces batting for him. He was not only hired without the position of chief strategic advisor being advertised but there were no details of his interview on any human resources (HR) file ei­ther. His ‘interview’ was conducted by Ramkrishna alone, and soon he came to wield extraordinary influence on her and the affairs at NSE. There are conflicting versions that cloud his ap­pointment. In her response to NSE, Ramkrishna said that Sub­ramanian’s name was suggested by HR personnel Rajjapa, who “used to introduce good resources” from time to time. In her sub­missions to SEBI, she has said Subramanian was recommended by an HR consultant but there is no record in the NSE files on the appointment. At the same time, Subramanian’s wife, Sunitha Anand, worked at the exchange. “I knew [Subramanian] through his wife, who was an employee of NSE and my good friend,” Ramkrishna told the SEBI inquiry. The emergence and selection of Subramanian for a top post at the bourse does not seem coinci­dental and CBI is pursuing the possibility of a larger conspiracy to provide illegal access to financial information and functioning of the exchange as the breach might well have serious implications for the integrity of the exchange and its products that are traded by millions of individual and institutional investors.

The career and responsibilities of Subramanian were a key part of Ramkrishna’s communication with her alleged spiritual advisor who seemed to take a lively interest in the official’s career, going so far as to state that if he were to take the form of a person then Kanchan (a reference to Subramanian) would be the closest representation. “NSE vide email dated June 12, 2019 it is noted that 10 emails were exchanged during the period from February 17, 2015 to February 19, 2015 (i.e. before the re-designation of Noticee no. 6 as ‘Group Operating Officer and advisor to MD’) between the Noticee no. 1 (Ramkrishna) and the unknown person having email id as rigyajursama@outlook.com which carried discus­sions, inter alia over new designation of Noticee no. 6 without making it as KMP,” the SEBI order states. The discussion on ensur­ing Subramanian was not designated as a key management per­son (KMP) despite having a role on par with top directors at NSE is important. It was clearly intended to ensure that his re-designa­tion as GOO and advisor to MD was not vetted. Given his role and responsibilities, NRC approval would be required. It is surprising that the chain of events unfolded without any intervention from other top NSE officials, including former MD Ravi Narain, who was appointed vice chairman in a non-executive capacity after Ramkrishna’s elevation, and then chief regulatory officer (CRO) VR Narasimhan. They were clearly aware of Ramkrishna’s extraordinary communication with her guru and even when a decision was taken to ask Subramanian to go—after public exposure of the case and mount­ing ridicule—proceedings of the board were not recorded on grounds of ‘sensi­tivity’ and information was provided to SEBI only after repeated reminders. “Thus, SEBI examination found that Noticee no. 2 (NSE) and its board were aware of such grave irregularities and misconduct on the part of Noticee no. 1 (Ramkrishna) on appointment of No­ticee no. 6 (Subramanian), in the NRC and board meeting of Noticee no. 2 held on October 21, 2016 but did not record the aforesaid matter in the minutes of meeting on October 21, 2016 in the name of confidentiality and sensitive information and submitted the report on above irregularities to SEBI only after repeated reminders,” SEBI said.

The identity of the ‘guru’ and author of the emails guiding Ramkrishna is a matter of speculation with guesses ranging from politicians to former senior government officials. The explanation might be more prosaic, though not bereft of intrigue. A forensic audit of Subramanian’s emails and computer by Ernst & Young for NSE concluded the email id was being used by none other than him. After considering the matter, the SEBI order has also reached a similar assessment.

The selection of Subramanian for a top post does not seem coincidental and CBI is pursuing the possibility of a larger conspiracy to provide illegal access to financial information

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“NSE vide its letter dated November 27, 2018 has submitted that its legal advisors had consulted practitioners dealing with human psychology. As per the opinion of human psychology ex­pert the noticee (Ramkrishna) has been exploited by Noticee no. 6 by creating another identity in the form of Mr. Rigyajursama to guide her to perform her duties according to his wish. The Noticee no. 1 was manipulated by the same man in the form of different identities: one as Noticee no. 6 who enjoyed her trust and other as Mr. Rigyajursama who had her devotion and dependence,” the SEBI report states. The proof of any identity can only be provided by Ramkrishna or surface in the course of CBI investigations as the agency is presently questioning current and former top officials.

The benefits showered on Subramanian as a result of the persistent interest of the alleged guru with a near-total hold on Ramkrishna reinforces the suspicion that the NSE’s assess­ment of the identity of the email writer may well be correct. Did Subramanian have a role in the creation of the email iden­tity since he was well aware of Ramkrishna’s reverence for her guru? And could this mean that there is another person who answers to the description of an alleged guru and who is not Subramanian? In her response to SEBI’s queries, Ramkrishna said: “I met Him for the first time on the banks of the Ganges nearly 20 years ago directly. Subsequently, over the years I have taken his guidance on many personal and professional matters. Along the way, since He would manifest at will and I did not have any locational co-ordinates I requested Him for a way in which I could seek His guidance whenever I felt the need. Ac­cordingly, He gave me an id on which I could send my requests.”

The SEBI order strongly questions the former CEO’s claim that the yogi-guru did not have a physical manifes­tation, noting that Ramkrishna’s responses indicate she met the unidentified person on more than one occasion in 2015. In her statement to SEBI on April 14, 2018, she admitted to having met the ‘unknown’ person at a temple in Delhi. Fur­ther emails indicate a plan to travel to Seychelles and, more specifically, Ramkrishna’s office fixed a meeting in Delhi on March 8, 2015, a Sunday. The ‘yogi’ speaks of being on an India visit and an office at Vasant Vihar. The exact link between the guru and Subramanian and whether the former NSE official played on Ramkrishna’s dependence on a “siddha purusha” remains a matter of investigation.

The identity of the author of the emails guiding Ramkrishna is a matter of speculation. A forensic audit of Subramanian’s emails and computer concluded the email id was being used by none other than him

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It is ironic that an exchange that came up as an effort to pro­vide a transparent and modern trading platform after insider scandals plagued the Bombay Stock Exchange (BSE) should find itself in such a mess. Among the founders of NSE is the current MD and CEO of BSE, Ashish Chauhan, who played a key role in developing modern financial derivatives, the Nifty Index and financial certifications, and whose exit from the ex­change in 2000 is remarked on for the succession of average leaders. The current developments have turned attention to the “co-location” scam which was investigated in 2018. The es­sence of the scam, exposed by a whistleblower, was the access provided to a certain set of people fractionally in advance of be­ing available to other traders and broking houses. The advance information led to estimates of massive illegal profits for the concerned traders and entities on a daily basis. The investiga­tion exposed major loopholes in the NSE processes exploited by a former finance ministry consultant, Ajay Shah, who faced fraud charges. A company promoted by his sister-in-law, Sunita Thomas, also faced the flack. Thomas is married to a senior NSE official, Suprabhat Lala, who finds mention in the promotions and transfers recommended by the ‘guru’ to Ramkrishna via emails. Questions have been raised if warning signals during the co-location scam, which played out between 2010 and 2015, were ignored. Former officials feel that the concerned bureau­crats at the finance ministry could have done a better job and a leaf could have been drawn from the action taken in the case of the commodities future scam that hit the MCX following which the founder of the exchange, Jignesh Shah, had to quit. A change of management and merger of the discredited NSEL and parent Financial Technologies were some of the key mea­sures proposed by then forward markets chairman Ramesh Abhisekh. The SEBI order renewed focus on the hacking of NSE servers to deliver a huge advantage to a select few like OPG Se­curities. The process of recovery of fines and other penalties in the case continues to be subject to legal proceedings. There is a view that a ‘deep cleaning’ of NSE might be needed to ensure transparency in the exchange’s functioning, particularly with regard to controversies about the technology infrastructure, as well as to bring about full accountability for the 2013-17 period. The exchange has, however, done well under the current leader­ship, having recorded a massive growth in derivatives trading.

Meanwhile, recent events have served to highlight the consequences of a weak and inefficient board being unable, and even unwilling, to set right the affairs at NSE. The leeway enjoyed by Ramkrishna can be estimated by the exchange’s IT unit being directed to allow her emails to be delivered to the rigyajursama@outlook.com id despite the internal alert sys­tem blocking the mails due to the detection of key trip words like “equity”, “IPO” and “markets”. The email that did not go through—and led to the ‘guru’ complaining to Ramkrishna that her mails to him were being blocked—was one dealing with NSE’s five-year projection sheet. Incredible as it may sound, email access to the suspicious id was restored and sen­sitive information continued to flow to the entity. The story of a compromised board and the motives of the top executive who broke almost every rule in the book will remain incomplete until the motives of the cast of characters are fully revealed. Was Ramkrishna a victim of a ‘spell’ cast by a consummate charla­tan or did she know more? And given the nature of information that was leaked, who were the beneficiaries? The credibility of NSE’s functioning will rest on the answers.

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Rajeev Deshpande

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